INVENTORY

1. An entity reported inventory on December 31, 2023 at P6,000,000 based on a physical count of goods
priced at cost and before any necessary year-end adjustments relating to the following:
 Excluded from the physical count were goods billed to a customer FOB shipping point on
December 30, 2023. These goods had a cost of P200,000 and were picked up by the carrier on
January 15, 2024.
 Goods shipped to a customer FOB shipping point on December 31, 2023 which are being held for
the customer to call at the customer’s convenience with a cost of P300,000 were included in the
count.
 Goods with invoice cost of P400,000 shipped FOB seller on December 31, 2023 from a vendor
were received on January 15, 2024.
What amount should be reported as inventory on December 31, 2023?
a. 6,100,000
b. 6,000,000
c. 6,300,000
d. 6,400,000
2. An entity reported the December 31, 2023 inventory at P2,500,000. The entity revealed the following
transactions:
 Goods shipped to the entity FOB destination on December 26, 2023 were received on January 2,
2024. The invoice cost of P300,000 is included in inventory balance.
 At the year-end, the entity held P250,000 of merchandise on consignment from another entity. This
merchandise is included in the inventory balance.
 At year-end, the entity had merchandise costing P150,000 out on consignment with the another
entity. The merchandise is not included in the inventory balance.
What amount should be reported as inventory on December 31, 2023?
a. 2,100,000
b. 2,200,000
c. 1,950,000
d. 2,500,000
3. An entity records purchases at gross amount but wishes to change to the net method. Discounts
available on purchases recorded from January 1, 2023 to December 31, 2023 totaled P100,000. Of this
amount P10,000 is still available in the accounts payable balance. The balances as of and for the year
ended December 31, 2023 before conversion are:
Purchases 5,000,000
Purchase discounts taken 40,000
Accounts payable 1,500,000
1. Which is not included in the entry to record the conversion from gross to the net method?
a. Debit purchases P100,000
b. Debit purchase discount P40,000
c. Debit purchase discount lost P50,000
d. Debit accounts payable P10,000
2. What amount should be reported as accounts payable on December 31, 2023?
a. 1,500,000
b. 1,490,000
c. 1,250,000
d. 1,460,000
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4. An entity reported accounts payable of P4,000,000 on December 31, 2023 before considering the
following data:
* Goods shipped to the entity on December 31, 2023 FOB shipping point were lost in transit. The
invoice cost of P100,000 was not recorded. On January 15, 2024, the entity filed a P100,000 claim
against the common carrier.
* On December 31, 2023, a vendor authorized the entity to return for full credit goods shipped and
billed at P150,000 on December 15, 2023. The returned goods were shipped by the entity on
December 31, 2023. A P150,000 credit memo was received and recorded by the entity on January
15, 2024.
* On December 31, 2023, the entity had a P500,000 debit balance in accounts payable to a supplier
resulting from an advance payment for goods to be manufactured to the entity’s specifications.
What amount should be reported as accounts payable on December 31, 2023?
a. 4,350,000
b. 3,950,000
c. 4,500,000
d. 4,450,000

5. An entity reported accounts payable on December 31, 2023 at P4,500,000 before any necessary year-
end adjustments to the following transactions:
 On December 27, 2023, the entity wrote and recorded checks to creditors totaling P2,000,000
causing an overdraft of P500,000 in the entity’s bank account on December 31, 2023. The checks
were mailed on January 10, 2024.
 On December 28, 2023, the entity purchased and received goods for P750,000, terms 2/10, n/30.
The entity recorded purchases and accounts payable at net amount. The invoice was recorded and
paid January 31, 2024.
 Goods shipped FOB destination on December 30, 2023 from a vendor to the entity were received
January 15, 2024. The invoice cost was P325,000.
On December 31, 2023, what amount should be reported as accounts payable?
a. 7,575,000
b. 7,250,000
c. 7,235,000
d. 7,560,500
6. An entity had usual sales terms of net 60 days, FOB shipping point. Sales, net of returns and allowances
totaled P5,000,000 for 2023 before year-end adjustment.
* Goods with an invoice amount of P200,000 were billed to a customer on January 15, 2024. The
goods were shipped on December 31, 2023.
* On January 5, 2024, a customer notified the entity that goods billed and shipped on December 31,
2023 were lost in transit. The invoice amount was P50,000.
* On December 31, 2023, the entity authorized a customer to return, for full credit goods shipped and
billed at P300,000 on December 15, 2023. The returned goods were received by the entity on
January 15, 2024 and P300,000 credit memo was issued on the same date.
What amount should be reported as net sales for 2023?
a. 4,700,000
b. 4,900,000
c. 4,850,000
d. 5,200,000

End